Exhausting Russian Resources by Sanctioning Western Software
Guidance for Governments and Companies Formulating Sanctions Proposals
📅 February 8, 2024
The Yermak-McFaul International Working Group on Russia Sanctions last month published its Working Group Paper #17: Exposing and Exploiting the Kremlin’s Software Networks and Dependencies, discussing the interconnected software infrastructure that sustains Russia’s illegal conflict in Ukraine and underscoring its associations with entities in nations that have enforced sanctions. The paper provides guidance for governments and companies in formulating sanctions proposals that will limit Russia’s access to Western software, ultimately increasing the cost of war for Moscow.
The paper’s key findings underscore the interdependence between the Russian software ecosystem and Western technology and the potential vulnerabilities countries that imposed sanctions on Russia after its invasion of Ukraine can exploit through additional targeted sanctions and regulatory measures.
Global export control and sanctions efforts continue to evolve to hinder Russian access to western products. The US Commerce Department’s Bureau of Industry and Security (BIS) in October 2023 published a list in collaboration with the EU, Japan, and the UK, containing 45 high-priority items that pose the highest risk of being diverted illegally to Russia. The BIS stated that these items, which include integrated circuits and radio frequency transceiver modules, have been found in Russian missiles and drones used in Ukraine. These controls, coupled with the imposition and enforcement of sanctions and other restrictions against entities and individuals that facilitate Russia’s access to sensitive technologies, allow countries to adopt appropriate measures to counteract Russian evasion strategies. Adoption of recommendations in the Working Group paper will also help stymie Russia’s access to software products that allow it to manufacture munitions and military systems to aid its war in Ukraine.
The connections between software developers and companies in countries that have imposed sanctions on Russia carry significant implications, suggesting that Western technology and expertise are indirectly supporting Russia’s military and civilian infrastructures. Russia’s slow progress in transitioning to domestic software and its ongoing attempts to reduce reliance on Western software create a continuing opportunity to use sanctions and regulatory channels to weaken Russia’s technological infrastructure.
Technology firms and financial institutions should carefully monitor transactions between Russian companies and software service providers, as well as the regulatory developments that could impose further restrictions on their business with Russian customers and business partners. The Institute for Financial Integrity continuously monitors regulatory developments in the sanctions and trade control space, providing warnings, key takeaways, and insights into the continuously changing world that can impact US persons and entities.
Join the Institute for Financial Integrity on February 29th as we explore the progress global powers have made in limiting Russia’s ability to wage war. IFI’s Nicki Kenyon and Pavel Verkhniatsky, Managing Partner of Ukrainian due diligence and corporate intelligence firm COSA, will discuss two years of sanctions, restrictions, and other measures countries around the world have implemented after Russia’s invasion of Ukraine in February 2022.
Topics up for discussion will include: